the formalitier government is accused of being sent rick. >> massive write-downs n u.s. and brazil while warning over a week's global recovery. and hsbc agreed to settle money laundering charges, paying a record $1.9 billion fine. and we're getting the bumping out here today, not only because it's christmas, but -- >> because james ferguson is here. >> and we are finally in the same place at the same time. ♪ reunited and it feels so good ♪ >> there we go. >> my apologies to everyone for that. >> how about that voice? i feel a christmas sing along coming on at some point. >> it's the holt day spirit. >> it is. >> also, we are outside the u.s.

senate. we're going to see just how much progress has been made or how little progress between the president and congress on the fiscal cliff situation. and we'll find out just how much the european debt crisis has affected tourist's willingness to travel to southern europe. >> and then south korea's presidential election, yes, it's not just japan, and what to expect from the winner. let's just plug you into where we are with this global market. more now on the global trading day in europe. 5-4 advances just about outpace decliners on the dow jones stoxx 600. most european stocks were up yesterday. the dax up 13 points. the dax, second highest close of the year, still up 27.5% for the

year. right now, the ftse sound, the cac kron, closed at a fresh 52-week high. and the ftse is up 13 points despite falls from italian banks. let's show you where we are as far as the bond yields are concerned. we just check in. italian yields, 4.4% on the year. we'll show you the twos and tens, as well. i'll give you more on how that compares to where we closed yesterday. so the two-year, that's the low where we were yesterday. 10-year spanish yields, 5.581%. two-year yield, 2.35%, kind of where we were yesterday, too. and they're continue to go

appreciateslide slightly from yesterday's close. as far as currency markets, 1.2880 was the two-week low on the euro/dollar. dollar/yen, 82.38. slightly firmer. you've got the nexus for the dollar is that the fact should extend their asset purchase plan. in the end, the party is doing pretty well on the polls. aussie dollar, 1.0482. you've got more money printing, commodity currency should do fairly welling. sterling/dollar at 1.6080. that's where we stand right now in this european trading session. only an hour or two into it. hi, li sixuan. >> thank you, ross. the shanghai composite lost more

ground in late trade after a four-day winning streak. agriculture, industrials and commodities puddle back after investors lost profits. but some rebounded after producers refuted contamination allegations with inspection reports. in hong kong, financials lent support to the hang seng, closing around a 15-month high. elsewhere, the nikkei ended lower by just a tad as exporters weakness. short sales rallied almost 7% after getting an additional $240 million loan. meanwhile, south korean shares were boosted by ship exporters.

in australia, miners and bankers led support to the asx ending higher largely by 4%. back to you. >> all right. thanks for that. catch you a little later. now, berlusconi and bersani are already exchanging blows after what's considered to be a controversial moment in italy. berlusconi has announced he's creating a new center right grouping. meanwhile, mario monti has been accused oversimplifying solutions during the fiscal crisis. carolin is joining us now from rome. do we expect more of this rhetoric today? >> oh, definitely.

not just today, but specifically over two months. elections will only be held probably on february 24th. we've got about two months of the silly campaigning season to follow. so yes, as you said, the verbal exchange is definitely heating up. it started with mr. monti's response criticism coming from officials about his renewed request for the prime minister post yesterday. he said this criticism was out of place. it was offensive not just for him, but also for all of the people in italy who have the freedom to vote. this morning, he did an interview with one of the channels here in italy and he said, i don't really care about this spread because the spread is based on fraud. that's the direct translation. meanwhile, if you take a look at the spread, they are moving higher again. 4.9%. italian equity markets are moving fractionally to the down side. so you've got mr. monti on the

wire saying, yes, we should care about the spreads. we should care about the italian yields. but at the same time, italian people and investors must know that we still have a government in place. mr. monti is hitting back warning against the oversimplified promises that will be made during the election campaign. so we've got a become and forth and we should expect that to continue over the next couple of weeks. we will be speaking to one of the biggest contenders in this prime minister race later on today. his name is mr. bersani, of course, and he won the primaries of the democratic party last weekend. and as far as current opinion polls go, if elections were to be held today, he would be the clear winner and the prime minister of italy. catch that interview on european closing bell. back over to you. >> carolin great stuff again.

we'll all keep an eye out for that later in the day. joining us now more more, poly sabaka and james ferguson. welcome to you both. paula, just to start with you, italian politics, you've been sort of saying frustration for some time, this isn't necessarily new, but as berlusconi try toes elbow his way into the political situation there, how critical should investors be, really? >> investors shouldn't be concerned about berlusconi himself, but the fact that the region, yes, a clear alternative. and we heard bersani has won the primary for the democratic party and it's a good sign because there is something there. but we haven't got a situation where we can actually look at the next general elections with a clear scenario of political stability. in the best case scenario, we

might have a coalition which might not be very stable. in the worst case snowo, we might not have anything. >> when he says we have extra unemployed, debts are rising, firms are closing, car markets being destroyed, actually, most of those things are true. right? so he is tapping into something -- there's a truth in it like all good politicians do. >> absolutely. the message is also very clear. we are here because we follow policies dictated by germany. therefore, italy should come out of the straight jacket. this is the message that berlusconi is sending to italians and actually, i think, it's a message that he will use for our campaigns. >> how much support will he get if he's at 15% right now in the polls 12347. >> my concern is that he could actually create some allians

with other -- with the populist leaders. there is a lot of discontent and it's quite easy to capture the discontent. it would provide a majority for ruining the country, for governing the country, but it will not enough to destabilize the debate. they say the p.w. trust say that 30% now say the euro has been a good thing in italy. i don't know whether you back that sort of trust. >> oolt r it's how you present it. there is a clear fact that going down economically for a long time. it hasn't had good growth in more than a decade.

so more now are in the face in malaise. at the moment, we don't see that. >> what do you take for investors? >> we've already had issues that the greeks are debating whether they should leave the euro. the thing we were always worried about is contagion, whether this gets into the big countries. so berlusconi may only be at 15% at the moment, but if he starts making comments which are thinly veiled versions of if we have our own currency it will be valued and hopefully many of these problems will go away, that can win a crowd over. >> andrew roberts, his analysis of italy says any country in the emu that would benefit from

restoring competitiveness, it is obviously italy. >> i strongly dwrae with that. there is no argument there as there wasn't for greece. we know the countries, italy, greece is in a crisis and it's a crisis due to lack of competitiveness. going back to the currency, under the currency they create a wave of all sorts of problems including inflation and i think it is not a good route. >> well, i do rather agree with paula on this one. the problem with the euro is it gives you easy and quick solutions. and we're going to keep developing your currency. as you go back to the old days where you keep lowering your currency and you pay relatively high rates on your debt. so the appeal of the euro in the

beginning was, oh, chief debt. it looked like christmas. now we're discovering that that regime, a ten-year regime where many peripheral countries got hammered. only germany sort of really held it together. now we have to look at how to undo this. for countries who have no ambition about their future, then maybe the policy is the way to go. italy had so many things going for it that falling back, that seems almost -- >> how about the service in the g-7. >> italy is two countries. it's a mini euro all on its own. italy has the wealth, italy has the industrialization, it has the export. italy really could make a go of it. we didn't see any productivity in the last decade. it should have made italy

stronger. i personally am much more concerned about france and spain than i am about italy. >> we'll talk about those. >> let me add asking. if italy is in this situation now, it relied on the easy way out. and politicians, including berlusconi, didn't have the foresight to see that. >> thank you so much for coming by. staying at the eurozone, investors will be watching for anything coming from the italian crisis. the results of the spanish bond actions are due around 12:40 cst. hsbc was hit with a $1.9 billion fine. the ceo said we accept

responsibility for our mistakes and are profoundly sorry for them. >> a full year loft loss of 4.7 billion euros, thinksen krup has more details. >> they are starting to look at the positive of what i would call a -- strategy, i.e., a clean sweep when it comes to the business strategy of thyssenkrupp as well as the instruct occur and the refocusing on being transparent and definitely being something shareholders should trust. so no dividends, jobs may go and the sale of celiamerica being looked at. the cfo says there's a handful of interested parties in that particular party of the business. all in all, i think if you look

at the message and the resale note issued by j.p. morgan earlier on this morning, on the back of the numbers, it's a very positive story because all the rubbish that needs to be cleaned out is being cleaned out. when it comes to the actual strategy, it will be reduced process on sale after the sale of about 30% will come from that sector. the rest is being refocused on technology and engineering. >> patricia, thanks for that. still to come, as the global economy trudges along the roads to recovery, will we see a high full rebound? we'll talk about it in just a few minutes.

mass rallies have been called in cairo, both anti-and pro government spaufrters are expected to take to the streets as ongoing divisions over the role of the approximated, mohammed morsi continued. overnight, he increased tough economic reforms as part of a proposed $4.8 billion imf loan agreement.

eyeman is in eye row with the latest. >> reporter: good morning to you. it has added more to the political turmoil here today. today there are several messages being sent to morsi. the referendum is scheduled for saturday. it's a controversial constitution that secular liberal forces here have announced it doesn't protect human rights or the rights of minorities and women. there are supporters of the president and they are, too, organizing their rallies for today and friday. and against all of this, the president has given the egyptian military law enforcement powers. that means they are essentially now allowed to act as the country's police force in the run up to the referendum. they're allowed to arrest civilians and that has caused a great deal of alarm for human rights advocates and organization ones.

so it's a great time of uncertainty here in egypt. right now, the opposition is calling for roadway injection of the referendum. they're not calling for a boycott, but they are insisting they don't want the referendum to take place. we don't understand whether or not there are any types of political negotiations behind closed doors to delay it. but there are reports the judges could very much boycott and start questioning the legitimacy of the referendum on saturday. >> eyeman, thanks for that. that's the latest out of cairo. >> outside the crisis lit block, there are signs of hope especially in the united states and asia. earlier i had a chance to catch up with david, the president of corporate affairs at manpower group. >> the u.s. in general is looking positive. and the u.s. is creating a lot

more jobs. china is still positive in the fourth quarter. china is going to show a slow and steady improvement. so we need those. >> higher expectations stronger in the likes of taiwan, india and brazil. let's go back to where you say they're weakest. greece, italy, spain, the netherlands. this is a very weak feature, indeed. how bad in it? >> it's bad. the eurozone is the global economic problem now. if you look at asia where i just returned from, both countries are feeling optimistic. but they seem to be inwardly focused now by being a triangle of china, india, indonesia. we're not seeing a great benefit into europe as we did before. for instance, germany is looking pretty pessimistic.

based on its lack of export performance to places like china. >> yeah. when the bundes bank came out and shortly downgraded forecasts, how is the employment picture? if you've got a relatively healthy china and the u.s. consumer bounce back, wouldn't that help germany? >> it certainly would. germany is relatively flat in terms of the employment outlook. so it's not a disaster. but germany trades an awful lot with europe as well as china. so it needs china to pick up in terms of its heavy engineering export performance, creating jobs in the manufacturing sector. but germany and the uk need europe to improve. >> it comes at an inkrd eblly high cost in terms of the number of people out of work. what has been done? how much have we destroyed so that the jobs outlook and growth prospect in this country? >> well, what growth prospect in

the southern european countries? we're seeing definitive bifurcation of northern europe and southern europe. southern europe, we are creating an underclass of long-term, especially youth unemployed that is going to give us a problem when the economies eventually start to get into balance and start to pick up. we still have this issue, even though we have tens of millions of people out of work, we still can't find the right skills and the right time. >> you mentioned the uk. the unemployment picture never got that bad in britain. so what happens now? why did it outperform? >> the uk is so different from the rest of europe. we've got london, the financial services sector, that didn't actually, in terms of job numbers, get hit as hard as the rest of europe.

so the uk has been pretty resilience. that is starting to create jobs regionally all around the country. the thing we have to look at, though, is a lot of the jobs that have been created are part-time and temporary. but both are still jobs and now jobs are being created in the uk. >>. >> david there speaking with ross. now, the fed begin aes two-day policy meeting today. their announcement is due tomorrow at 12:30 eastern. it will be followed by the fed's updated economic forecast at 2:00 p.m. and ben bernanke's news conference at 2:15. the fed is expected to launch a new bond buying program called operation twist that will expire at the enovd month. james, we know this is a huge meeting. this is obviously a good time for the fed to embark on something new for 2013. is this the wise approach? >> well, it's the wise approach in a very near term, a, because operation twist is coming to an

end. b, because we have the fiscal cliff or fiscal gentle slope or whatever it turns out to be to negotiate and c, because we haven't found our legs in the u.s. and we clearly have some global headwinds coming in 2013. however, the thing about this qe in the u.s., unlike previous ones where they could see big economic problems, let's comfort the market with a really big number, this time we're going to do it month by month. solo the annual figures look very big, they're going to halt qe as long as it looks like there's inflation. >> which means there might not be much market reaction as investors realize that. find out what travelers are still flocking to the shores and how much of that money contributes to eugdp. be back in a few minutes. can i ?

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these are the headlines from around the globe, bank stocks in europe down for a second day. some of the biggest lenders of the company have seen over a 3% loss. and prime minister mario monti and sylvia berlusconi

escalate. hsbc agrees to pay a record $1.9 billion fine over money laundering charges. and one lawmaker offers an olive branch to the white house regarding the fiscal cliff. gains for most european stocks yesterday outside of italy. and we sort of continued that trend today. the xetra dax just about on its 52-week high. the cac 40 hit a 52-week high yesterday. the xetra dax up around .the %. yesterday, we saw a real back up in yields at the ten-year level sustained for italy. really across the curve. today, we're seeing a bit of a rebound in place. yield falling 5.55%. italy, down to 4.8%, just about.

bund yield is moving a little higher. pretty much a mirror image of what we were looking at yesterday, ross. >> tourism in the region has declined, but how badly has the travel sector been hit? the value of tourism as an industry still represents 5% of gdp. but european market share continues to fall off in the last decade, for more, we have the ceo of the european travel commission joining us. why have we seen europe shares of the global market? >> this is a normal process. new destinations for lastin america, korean nations, they have been improving in the last year or so. so that doesn't mean that europe is not -- europe is still the

destination destination worldwide. >> ohio does it work out on the global net? i'm wondering whether the pie getting bigger has meant the european number stays the same. >> europe is still increasing, but now we have to -- >> it's getting bigger. >> exactly. >> right. okay. so we're not losing out. >> it's just interesting that the euro not being weaker is the largest issue regarding tourism. it doesn't look like that's in the cards. >> a weak euro is very good for our overseas travelers. they're coming to europe and especially the usa and canada are troubled a lot. which is very, very good. >> where is the money coming

from? >> the usa and canada, we will now have to focus in brazil and china, which are emerging economies. >> and, james, do you find it at all encouraging if there's a balancing away from the european sector in europe? is it something that needs to happen or is it still going to remain on positive industry? >> it was this policy or per referee that southern european countries had on the falling back every time there was a bit of a problem economically rather than more aggressively and maturely dealing with productivity. so in some respects, it's a good thing for those countries except if it's a slow transition and the problems have arrived quite fast. and i think the point that you made is absolutely right. many people in the word used to love going to italy, spain, greece, as soon as there was a devaluation. because suddenly the drinks were cheaper and so was the hotel.

and that drag isn't really occurring. >> and look at our places to go. is there anything that these countries can do as a result? >> absolutely. and, actually, this is a good thing for this country. so i think the message is that it's not the right time to cut employees. and tourism is 10% of the gdp of europe. these countries, you mentioned already italian, spain, is already 12 mers to 15%. this is a very, very -- message to cut in times of tension. so tourism is not the right place to cut. >> we'll leave it there. thank you so much for stopping by. >> thank you. we'll move on. plenty more to come. if the airline doesn't open wage talks, this doesn't necessarily mean strikes, but it could rule over the airline season.

and taking industrial action off the table. >> if our actions still been -- by cafe management, then we have no choice but to declare a strike at the time it's needed. >> translator: in the last week, we've already returned to the fau chair lady telling her that we are open for discussion on other subjects, provided the industrial action is taken away. >> and shares of cathay pacific traded lower in hong kong on that news. richard brans yop has offered to pay -- sir richard said it was wishful thinking and totally misguided. mr. welsh has suggested that if a deal goes through, the

atlantic brand would be dropped. he said he wasn't a billionaire like branson. perhaps a knee in the groin might have been a better bet. >> i had to read that a couple of times to see if he really said that. he really did. >> he's australian. it's a good one, though, right? if they lose the majority stake to air france and klm covered up between them, is virgin brand still in existence or not usually if a bigger brand pegs on a lower brand, but it seems the smaller peg disappeared. however, if it's a premium brand, they highlight that. it may well be that virgin becomes the international brand. >> here is the thing. all the people that currently fly virgin, would they fly virgin if it was called delta or air france, klm?

>> maybe the vijin brand doesn't have quite the same -- >> i don't think it's as well known or there's not as much of the association there. >> they're capturing the market. the market that virgin has. >> and that could work in its favor because it's seen as something you aspire to. >> anyway, worldwide@cnbc.com. tweet us, as well. if you have any questions for james, he's only going to be here for a few minutes. in japan, a sharp market action for utilities as a key nuclear plant is found to be sitting right beside a fault line. >> codfi electric fell 4.4% and tokyo electric fell 1.4%. this is because a panel of government-appointed exports concluded that a nuclear reactor

in the western part of japan is likely sitting on an active earthquake fault. so this reactor may be the first to become shut down because of safety concerns. if there is an five fault under the reactor, it won't be able to start again. and the chief cabinet secretary cautioned more steps are needed before making the final decision. what to do with nuclear power has become a huge issue for japanese voters ahead of this weekend's election. the ldp is in favor of keeping the nuclear reactors. back to you, kelly. >> okay. japan is not the only major company facing an election. in south korea, economic stimulus and reigning in big conglomerates have rained in major concerns in that campaign. sherry change has more on this

from seoul. hi, sherry. >> hi, kelly, theater. the debate was on economic policies this time and the two major candidates ruling conservative party and main opposition parties, both called in for the so-called economiczation. park says its elect official and establish a transport system that gives fair opportunity to all. whereas mon size, others say there's another way to go. park called for ways to tackle high household ded debt and reanxietyize the property market. moon, on the other hand, said distributing the benefit of growth with the working glass will perk up domestic demand. who came out as a winner? many experts say they both neglected the discussion of new

growth engines and lacked specific ideas on how to implement the policies they're calling for. at this point, it's a very tight race with parka leading with 4.9% of approval rating followed by moun who has 34.8%. and they're sit to square off once again in their third and final debate on social issues like low birth rate and asian society this sunday before voters head to the polls in next wednesday. >> back to you. >> that's sherry kang following that for us. i want to bring us the results of the spanish auction we've been waiting for. an auction has gone off with yields lower than the last time around. the 12-point paper going in for about 6.25%. and the treasury bills underunder 279.

it was about 2.4 billion euros on the 12 1/2 -- >> if my math is right, that's nearly 3.9. yields lower, they sold a little bit more than they wanted, james? >> the two things to point out here is firstly, look at how steep they are. you're mainly targeting the bank derisking their auction sheets. that means the banks would rather lend to you, the government, than len to the public at large. >> there's an auction coming up on thursday ott not t bills, they're selling 1.2 billion. it's 557%, 28, you're 2040 for 4.9%. >> 4.9%, would an investor take it at this point?

>> there are institutions that have to take what they can get. with a shortage of that paper, they have no choice. >> if the concerns are seen, the fact that they've been shortening maturities, generally speaking, they need to send the paper. >> you sell to those who will lend to you cheaply. that's the banks. you find yourself getting a shorter and shorter duration. what actual market signals are we getting from these auctions, particularly in the mid to longer determine durations? they're deliberately distorting the markets. >> how long can they keep this cap on yields or keep this put in the market? >> well, you know, the german bunt market is bigger than the spanish bond market. theoretically, they can keep this going for a long time. the real problem is not so much that, but what do we do? money supply growth in europe, it's not just the periphery now where this is looking like it's

going to turn negative. it's negative in the northern block, as well. >> which is the ecb's cover, isn't it, for qe. as inflation goes down and money supplies contract, if you're a hard line monetary, that's your cover, isn't it? >> what you start to realize as a german, you're worried about hyper inflation. so yes, suddenly you'll very have to be panicked into the ultimate response which is to print money. >> and we'll leave it there. james ferguson, thank you for all your time this morning. now on the commodities front as china's commodity recovers, the company is ramping up its resources and raw materials to record levels. that includes crude oil. oil futures are slightly higher in asian trade. you can see the nymex, better than .5% for brent, although it has been change bound at about $100 per barrel.

that's just about where opec members want them. opec will be meeting tomorrow to see who will publicly lead the group. joining us for , zendana hari. good morning. what are your expectations for this meeting? >> we aren't expecting any major surprises so far based on what the ministers coming into the meeting have been saying publicly and even privately. officially, opec will stick to its 30 million a day barrel target. that covers all the members of the group. that would be actually production has been consistently higher ever since this target wab set. almost 1.1 million barrels above the target is what opec has cut into producing. >> heading into a meeting like this, incident isn't just about the supply, it's about demand. we've seen some softening in

global production. how much will these countries have to produce next year? is it going to be a demand story ultimately as we look at global growth or is it going to be a supply story, about the middle east and where the flow is actually coming from? >> i think it will be a supply story. we saw entire libyan production out of the market. however, supply concerns do seem to have receded. iranian production is down, exports are down. that has been largely factored into the market. saudis have ramped up production. between april and august, they were pumping at an all-time high. stocks are pretty comfortable right now. so to my mind, it's really a demand question. why oh beck is likely to rule over its target for now is

because as far as you can see down the road, which at this point is really not that far, it does seem that, you know, just the conditions, economic conditions and oil growth is likely to remain as it is. i think opec will have to be quite watchful for any signs of further deterioration in the climate and the oil demand growth globally next year and that's going to be the biggest challenge for them going forward. first of all, they'll have to mop up the extra over a million barrels per day that they are producing above their target as well as perhaps even look at cutting back if they want to maintain prices around $100 a barrel. >> and if there was a pick up in the global economy next year, from where we are, how tight would supply be in terms of pumping the sort of crude that the market wants? >> that is a bit of a worry. as i mentioned earlier, right now, the values seem to be more on the down side as far as

demand is concerned. if it does pick up, the single biggest critical issue right now is opec's capacity. that does come up time and again in discussions. especially with saudi arabia having ramped up close to 10 million barrels a day, that is pretty much the only proout producer within the cartel, uae and probably kuwait have some spare capacity, but very little. so in terms of opec's spare capacity, the cushion has been wearing off. but interestingly, we are hearing a lot of new supplies coming from the nonopec producers, definitely in the u.s. as we've all been witnessing quite a surge in title and supply in the u.s. so in terms of supply right now, as things stand, to me, that doesn't seem like a very big -- >> thanks very much for that,

editor and director at platt. steve is going to be at that opec meeting in vienna. so don't miss out on that. in asia tomorrow, japan releases machinery orders for november. also india will release november cpi. and glenn stevens will give a key speech to the bank of thailand in bangkok. >> we're going to take a quick break. head over to cnbc.com for stories that are currently trending. first, billions of dollars stashed overseas, find out who they are. and concern over departure of prime minister mario monti. and the fiscal cliff is still getting you cooking? head to cnbc.com for the latest. we'll also have a sneak peek of what the "squawk box" team has prepared.

still to come on the show, after some high profile dubs like facebook, the ipo market was new this year. but a new report says things will change in 2013. find out why.

eurozone finance ministers will discuss greece's buyback. last friday, the deadline was extended to this afternoon after they failed to reach a 40 billion euro target. the two-day summit in brussels on thursday is expected to produce a political agreement. while the details of the plan will be finalized at a later stage. ipo activity is expected to pick up in 2013 after a slowdown in year. that's according to ernst & young's latest report. the amount of capital raised this year is down 30% from a year earlier. but exchanges in europe and the u.s. already are seeing business start to return this quarter. real estate, health care, gas are the sectors expected to become more active. for now, we're joined by tina fernelli. >> to see you actually down 30%

would suggest that there's a major shift underway here or maybe there's just plenty of concern in the market. >> it wasn't a great year in terms of capital rates, you're right, kelly. and we were down in capital rates, too. europe had its best quarter in q4. they did nearly 50% of all capital raised in the fourth quarter and the u.s. had a very good year. they were up in numbers, they were up in capital. going around the world, asia, we have always predicted that asia wouldn't have the large state-owned ipos that it has trended in the past three to five years. that ta activity would become much more smaller deals, much more entrepreneurial as opposed to large state owned. so we anticipated that somewhat. but we're definitely looking to 2013 for a pick up. >> we just showed the number of deals out of china. they're over 200. yet if you were to say what are the exchanges doing the best, it's still u.s. exchanges and in

japan, even. >> yes, you're right. u.s. exchanges did extremely well. japan had a significant ipo, the largest airline ipo ever. pockets of emerging markets, malaysia surprised us this year with strong ipos, more private equity investing in these next tier emerging markets. >> so what is your prognostication? >> we think the u.s. is going to continue to be strong. if they can solve the fiscal cliff issues, keep economic indicators up, what they're doing with the jobs is good, performance is good. asia is going to take a while. end of 2013, we will see good purely activity. that will depend on investor sentiment and good, active performance in stock. >> so a bit of reassurance that these companies can be invested, the one the country and the company is managed. >> investors are concerned about

return and certainty. anytime you can beat analyst expectations, deliver on your promises, you'll have strong results. if you don't, you suffer a 50% in market value drop immediately and take up to three years to regain credibility. so it's really important to be at a public company ready before the event. >> there's a number of high profile ipos, for example. >> there will be even greater premiums demand on pricing, right, to give these away. and it's always a bit of a -- to get the pricing right. >> ross, you're right. there's so many factors and it's a buyer's market. pricing, very cycle. window, very narrow. must be prepared to move quickly. >> what we have seen is sentiment can change so quickly. it takes time to prepare an ipo. by the time you get there, there's a lot of proponents.

>> absolutely. we know down in postponements last year and after performance, almost 80% priced within their range or better than expected. but to your point is the negotiation up to the offering is different. the amount of crossover investment, in other words, if you're a venture capitalist in private equity, you're not getting out fully. you're carrying over into the public offering. >> people want to see you retaining a share. >> absolutely. so all of those dynamics are certainly different than what we've seen in traditional markets. >>. >> thank you so much for shopping by. and still to come on the show, berlusconi says monti is responsible for dragging it look into recession. monti says his country has made great progress. and we can save you 10% on ground shipping over the ups store.

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welcome to "worldwide exchange." i'm kelly evans. >> and i'm ross westgate. >> progress is reportedly being made in an attempt to miss the fiscal cliff. and words between sylvia berlusconi and mario monti is

increasing. and hsbc paying a record $1.9 billion fine. >> you're watching "worldwide exchange," bringing you business news from around the globe. right. if you've just joined us, welcome to the trading day. we have had the latest snapshot of german sentiment. they measured sentiment at 6.9 points. better than november. the polls were minus 12. the current conditions index, 5.7, a particular up from 5.344 in november. and the indicator in pore territory for the first time since may 2012. also follows something similar with the latest ifo number. euro/dollar coming up to the best levels of the day, hit

11.2880 during the session on monday. that is where we stand with that data. good news for the eurozone. kelly, how is it looking? >> it's more of a reaction in the ur % the dow is poised at about 44 points in the open. 13-11 is the level there. over here, the s&p 500 is adding about four points, similar magnitude, 1422 is the number at the moment. we can take a look at the ftse cnbc 300 trade. and we're up about .2%, gain something traction in the numbers. a lot of this has to do with the boundback from yesterday's sell off. it was most concentrated across the periphery in europe. taking a closer look at those bourses today, we are seeing a rebound. the ftse 100 adding better than .11%. the xetra dax better, the cac 40 about .6% better.

the ibex, up almost a percent. >> let's show you what's happening with yields. they've been swinging around a little bit in italy and spain. they are lower right now. two-year spanish yields, 3.11. we did close at 3.05%. ten-year spanish yield, 5.53%, below the 5.54% that we closed at yesterday. they raised a maximum nearly 3.9 billion. yields to t-bill auctions lower than they were in november. better news there. italian yields at the moment, 2.28%. now lower on the session and ten-year italian yields, 4.79%.we closed yesterday at 4.8%. on the currency markets, just saw euro/dollara session at 1.2972.

yesterday, 1.2880. dollar/yen, 82.47. not far away from that four-month 82.84. polls suggest mr. arbase might win the election in japan. aussie/dollar, steady after we saw decline in australian business confidence. it's okay for kelly and that particular exchange rate. that's where we stand right now here in europe. let's recap that asian trading day with sixuan once again in singapore. >> thank you, ross. asian markets closed out the day on a mixed bag. the for some beaten down atlanticermakers bounced back after refuting contamination allegations. in hong kong, financials brought

support to the hang seng, closing around a 16-month high. signature lost almost 2% after reporting the flight attendants might stay action over a wage dispute. elsewhere, structure burst at almost 7% over a $240 million loan. meanwhile, south korean shares were listed by foreign buyers. miners and banks lacked support through the asx 200 also ending higher by .4%. lower by .2% is the sensex. back to you. >> thanks very much for that. >> and the good news, as well, is that we're back together for the first time in, like, forever.

>> reunited. i won't sing again, i promise. >> if you had been here an hour ago -- >> my heart is filled with song at the reunion. >> as ever, plenty to talk about. kicking off with italy. >> that's right. berlusconi and monti are trading blows ahead of what is expected to be a controversial election. berlusconi has accused mario monti of bringing policies that pushed the country into recession. carolin roth has sent us this report. >> political campaigning here in italy definitely back in full force. and the language is getting harsher and harsher. overnight, sylvia berlusconi hit back from that criticism coming from eu officials about his renewed quest for office. and he said that those comments were offensive and that they were out of line. this morning, he gave another

interview with one of his tv stations here in italy and he directly criticized mario monti saying that the economy had worsened under him and that he is simply too german-ocentric. talking of spreads, well, yields did go higher this morning. the spreads did widen. the ten-year yield now at around 4.9% again and italian equity markets are trading tractionally to the downside. mario monti, the current technocrat prime minister who is stepping down after the budget vote is passed, he hit right back at berlusconi saying that there is a warning against oversimplified promises in the campaign. he said that the widening spreads must be taken seriously, but people must know that we still have a government. later on today, during europe closing bell, we will be speaking to one of the biggest

contenders in that prime minister race. we'll be speaking to mr. bersani. don't miss that interview. back over to you. >> now joining us more is alesandro kintori from citi. thanks so much for your time. it's remarkable, italian bonds have apparently returned almost 20% this year. what happens with rates now? >> i think now we have to wash out a little bit of a lazy, late long enter into the market not because of fundamentals, but because they were running behind benchmarks. i think the shaping in the italian yield curve is an indicator of this. and this actually confirms our thought in the three years that needs to be corrected a little bit. >> we're hearing from investors expressing concerns about berlusconi's return to politics, if not to government at least to the campaign season.

bill blain saying it's going to -- you know, the exit of monti would expose the hollow sham that italian politics really is. you're italian yourself. what's the feeling as to whether or not the country is susceptible to what berlusconi may offer in terms of campaign rhetoric and essentially taking the country in a different direction? >> well, it's entirely up to the population to choose their leader. i would say look at the performance of mr. monti and mr. berlusconi, you can't really say that mr. monti's performance is astonishing. we've had two crises during his office. of course, we cannot -- you cannot justify blame him. it's the legacy of the past when we had a crisis during the berlusconi government. having said that, i think the big sentiment here is that mr. monti had a widespread european recognition amongst leaders who arrest mr. monti in the late

stage of his government did find some sort of -- i would say pressure from him, european leaders, to step down. >> we're starting to see a bid of would ittening. besides the debt market and the shares held outside the one, increasing corners are concerned. >> the statistics, i should point out that the ratio of holders of italian government debt has increased over the past 12 months. we are not where we were two years ago, not only in spain, but in italy. one of the few countries in the eurozone where the share of international investors, but i think if we were to talk about the flows, we should be looking more at france than spain.

>> france has canceled its last two treasury bonds for the year. read anything into that? >> no. i think it's a mert of issuing out the files until next year. and the treasuries overall role in terms of high visibility in terms of revenue streams, so they're just doing the job. i should say the italian treasury here is doing an excellent job over the years. >> the fed is beginning a two-day meeting today. the announcements come together. 12:30 eastern. the fed is expected to lunch a new bond bike program to replace the operation twist that expires at the end of this month, the goal to keep rates low, possibly soften the blow from any risk of the u.s. going over the fiscal cliff. but bernanke did warn last month that the fed couldn't offset that shock. how small is the risk that they

don't deliver what credit markets and investors expect? >> i think it's pretty clear that they will continue with the forward guidance, keeping rates low until 2015, keeping accommodate addition until fundamentals pick up, but also just keeping on buying 37 we expect about 45 billion and the treasuries per month. but this should be pretty much on the cards. i wouldn't expect any change to that. if there is a change to that, if there is an undershooting at the measure, it will be a big surprise in the market. >> thanks so much for joining mess. talks between the white house and house speaker john boehner's office having been increasing. the discussions have become more serious and both sides still face major differences. there's an office peace by

republican senator portman in the "wall street journal." while he disagrees with president obama's call to raise taxes on top earners, quote, the negotiations require a good and take. still to me it sounds like a lot of the same. but we'll leave it there. they will be leading off every hour with a special mission critical rise above report talking to lawmakers pushing them as to why there is no deal to avoid the fiscal cliff and explain what's at stake. i think they may be chasing people down the halls to some extent. >> to be a fly on the wall. >> i guess it's more. we will hear becky personally. >> becky will remind us what's

going on today. a pen fee of them will go october trade sales. the like day for earning, that's due before the opening sales. >> always a good read. protests in egypt's tahrir square turns to violence this morning with nine reportedly injured from an unknown gunman. we'll have the latest from cairo when we come back.

you are watching "worldwide exchange." these are your headlines. talks on the cliff seem to be advancing as the gop is ready to negotiate. berlusconi sets up the rhetoric on monti. and hsbc settles money laundering charges and agree toes pay a record $1.9 billion fine. nine people have reportedly been injured after unknown gunmen fired at protesters in tahrir square early this morning. mass rallies have been called by both anti-and pro government supporters and ongone divisions over the role of president mohamed morsi. ayman, what's the latest?

>> reporter: good morning, kelly. there's been a series of attacks that happened about 1:00 a.m. or 2:00 a.m. local time. it attacks a that have been camped out in tahrir square over the last couple of weeks. this comes after protesters were planning a march. the anti-government protests have been very disenfranchised by a constitutional referendum schedules to take place on saturday. they are very critical of that referendum. they are more disappoint the with the constitution and the president and want another one drafted up. but for his part, president morsi who is from the muslim brotherhood, they will hold their own rallies later today. to so there's a tremendous amount of tension between these two groups. meanwhile, the president has

given the military in this country law comfort powers and essentially that gives them the ability to and authority to arrest civilians in the meantime, that is through the referendum. they are doing it, they say, to ensure security and stability throughout the votes, but many human rights observers are extremely alarmed about what this could mean in the long run for the return of military rule. more importantly, the authoritarianism of it all. still on the show, women are continue to go make progress breaking through that glass ceiling, but a new report says they're still having trouble breaking through that executive rank. >> in the board room, next. can i help you? i heard you guys can ship ground for less than the ups store. that's right. i've learned the only way to get a holiday deal is to camp out. you know we've been open all night. is this a trick to get my spot?

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now, the u.s. treasury has decided to sell the rest of its stake in aig, ending the government's ownership stake in the country four years after its bailout. the treasury is offer around 234 million shares or 16% for aig for a reported $32.50 a share and that would raise $7.2 billion. at one point, treasury estimated it would never recover all of the bailout money, but aig has

paid the bailout and generated a profit as it returned to viability. i hope i got all that right. aig stock in frankfurt off marginally, .75%. and we can take a look at hsbc's shares, as well. hsbc said, quote, we accept responsibility for our past mistakes and we are profoundly sorry for them. shares fractionally lower there. the bank of citi said uk authorities would not attempt to grab the uk based assets of a failing u.s. bank. the offer, which was not reciprocated, is part of an attempt by regulators in controlling the risk of

institutions collapsing. and the 20th position to hold a ceo at a fortune 500 case. and 16.6% are at the broad end of the fortune 500 firms. with more on the catalyst 2012 fortune 500 consensus is deborah gillis. deborah, thanks for joining us. why has the number not improved in sort of seven years? >> well, if you say it's been seven years and barely any movement in terms of women's representation on -- and, in fact, very little movement over the last three years for women in executive officer positions. why is that? it's certainly not a supply problem. we know that there are many women with the skills and experience to serve on corporate boards. in fact, our research shows that if you look at the executive officer pool and the fortune 500, there are 710 women with

the skills and experience to serve on corporate boards. so we really need to dispel the myth that it's the supply issue. >> well, it doesn't help that we've seen some high profile women you can talking about their struggles, balancing family life and advancing more in your careers. does it come down to the women to keep themselves in the ranks? >> we've put forward a unique solution today. it's a unique contribution to deal with this issue where we're calling on catalyst members, ceos of the leading fortune 500 countries around the world to contribute the names of the women they view as being ready for corporate board service. we think this is important for a couple of reasons. one, we know that sponsorship and that kind of endorsement as senior executives is critical to advancement. we also know that this means

that they have skin in the game. they're committing to helping to move the needle here. and that kind of sponsorship combined with the leadership of those ceos, we really hope will make an important contribution to breaking the logjam for those on corporate boards. >> we're certainly seeing innovation. in some cases, trying to impose quotas for putting women on board. do you expect anything like that to happen in the u.s.? >> you know, what's interesting, when you look at the quota situation or if you look at the recommendations of the laura davies commission report in the uk, what we've seen in australia, all those initiatives are showing that when there is real cob veteraned and intent n intentional action on the part of leaders, we're seeing movement in terms of the number of women on board. so, again, it speaks to the fact that there isn't a supply problem. this is an opportunity really for leaders to look deeply into the pool of qualified women.

if you look globally, including the fortune 500 in the u.s., the fp 500 in canada, israel, australia, the uk, there are 2,000 women in the executive officer ranks who are available to serve on corporate boards. again, these initiatives point to the importance of intentional action. >> okay. catalyst survey again there. deborah gillis, coo is joins us with the findings. i hope you've put my name forward, by the way. >> i put your name forward for everything. >> ready and willing to serve? >> there's nothing i don't put your name forward for. still to come on the show, adequately preparing young people for the workforce. we'll talk with some employers who might not agree with future education. >> and a little bit of a rebound shaping up on wall street.

welcome back to "worldwide exchange." i'm kelly evans. progress is reportedly being made in talk toes avoid the u.s. fiscal cliff. another top republican lawmakers offers an olive branch to the white house. and sylvia berlusconi accuses the current premier as being german-centric.

and the dfw returns to a new year high. >> you're watching "worldwide exchange." bringing us business news from around the globe. 13220 is the level of the dow. the nasdaq is trying to add five of six points. we're seeing a bit of a rebound shaping up here in the red. the ftse global 300 is up about .2%. for the most part, it's all green across europe. the ftse 1100 adding .2%. the xetra dax and cac 40 in germany, paris, better than .5%. up 1% after falling double that yesterday. we're seeing gains in italy and portugal, ross, as invest everies have now perhaps priced

in the latest turmoil in italy. >> absolutely. meanwhile, unemployment may have ticked down 7..7%. 10.9% for those aged 18 to 29 and this one saying they're struggling to fill vacancies because of a lack of suitable skills. this all according to our next guest who just completed a survey about youth unemployment and education worldwide. joining us is diana fowl. diana, thanks for joining us. how big is the gap between what employees are looking for for entry level staff and the skills that the current graduates are offering? >> the gap is tremendous. it's a real tragedy. you mentioned the very high youth unemployment numbers, but 75 million youths today and eight youths, half of youths in the middle east and half of youths in greece and others,

that 75 million can be contrasted to the shortage of workers for medium and high skill jobs which we establishment by 2020 could reach 85 million. so we have a paradox of too many jobs, too many vacancies and, therefore, an education and unemployment system that is not working correctly. unfortunately not enough data on this matter is available. so our studies, 100 case studies and surveys 8,000 participants in the system across nine countries tries to provide a fact base. and the news is not wonderful. what we learned is that the icip really operate in the system. they participate in parallel universes, if you look. for example, you asked providers whether they think the youth are adequately skilled to enter the jobs force. 72% of them will say yes.

but if you ask the youth and you ask the employers, fewer than 50% of them will say that youth are adequately prepared for their first job. now, this is a terrible mismatch between what providers think they're doing, what youth and employers think they're getting. and it's no surprise, given how quickly they fail to do the things that need doing between them. >> diana, if i can -- if i can just jump in there for one second, and this is going to be controversial. it's not just that young people today are unmroim employed. it's that employers are frankly saying they're unemployable. >> well, certainly that they lack critical skills to do the job well. and what we learn is that we can take all the youth and break them down into seven segments, five post secondary, two without

post secondary education, and only 38% of the youth feel that the system is working for them. in the sense that they can get the jobs that they want and be satisfied. and if you look at employers and segment those, we have three segmentes and only 31% of employers feel that the system is working for them, meaning that they're finding fully the talent that they need to fulfill the jobs that they want. so while there are pockets of success -- >> diana, sorry, i think the number of -- in the uk who are deciding that they can't get what they want from the graduate schemes in britain, so they're starting to target potential employees and guiding them through the educational process. are we going to see more of that globally and in the united states and elsewhere? >> we would hope so. we find that the reason the e to e system breaks down for youth and employers, it's three

critical interceptions. the first one is the enrollment and completion of education. frankly, there's not enough information at the right time for youth to make the right decisions. but then it also breaks down in building the skills. and so unless we have providers, employers and youth worrying working much earlier in the process to develop those kinds of skills, on-the-job training, specifically targeted to the kinds of opportunities out there in the marketplace, we're not going to see improvements in the system. in the third intersection, which is finding a job, we find that the most successful employers are those who have spent time with youth before they even finish their school through some kind of on-the-job training or some kind of exposure to the work that they themselves do. >> talk a little bit, diana, if you could, about where the mismatch seems the worse. it looks as though the developed countries that are among the places where frankly this mismatch between employers and people looking for jobs is most pronounced.

>> yeah. i think one interesting take in this, and you can see the data in the report, is to me, the education they took improved their chances of finding a job. overall, the average is 50%, which is quite low when you consider how much money you spent on education. but in the united states, it's as low as 44%. a country like saudi arabia, it's as high as 60%. but keep in mind that the saudi arabia state guarantees graduates a job in the public sector if they graduate. even though it's not getting need, 60% felt there was something to dig through. >> investor sentiment in germany, much better than we might have thought this morning. the zew above expectations.

patricia has more of the details and the reaction in frankfurt. patricia. >> and back into the positive territory for the index there. the current conditions much better than expected. we had almost a bit of a turn around in the back that is due to react with the 19-month high. also the euro looking rather pale up 0.2%. still below 130. but nevertheless, i think what the communications is is that investors have been living at the back and the way it has performed since the beginning of 2012. we are up around about 28% on the index. of course, there's always a debate about the volumes. let's have a look at what is going to happen in germany. first of all, they see there is no recession for the first half of 2013. it doesn't mean that now germany continues to be the growth engine of the eurozone. however, there is going to be perhaps a bit of a slowing, perhaps of a bit of a stagnation, but not a drop in

the recession in the german economy, and that is seen as good news, indeed. now we have to wait for the ifo index with regard to businesses. one thing we heard from businesses all across germany is restructuring, restructuring, restructuring. jobs are going and sooner or later, that will impact the sentiment drivers here in germany. but at the moment, the market is reacting very positively to investors here in germany for now are happy and the outlook seems to be fairly stable. >> patricia, thank you. catch you later. coming up, we'll get a live of today's middle chris kal coverage in the nation's capital.

welcome back. here is a quick recap of the top stories trending right now on our website. cnbc's john fort reveals which major tech giants have billions of dollars stashed overseas. analyst share their concern over departure of italian prime minister mario monti. and the fiscal cliff is getting plenty of attention. head over to cnbc.com for the latest. now, berlusconi and monti

are exchanging verbal blows ahead of a caustic election campaign in italy. the controversial businessman and global prime minister has accused the prime minister of pursuing german-centric policies that have pushed italy into recession. monti reiterated the need for italy to continue economic reforms. >> it's interesting, we saw yields trying to edge a bit higher opinion let's recap where we are. kick off with italy. the close yesterday for the ten-year was 4.8. the close to the two-year yesterday on italy, 2.29%. below that at 2.25%. we had a spanish auction today. they raised nearly $379 billion. yields in that auction lower than they were in japan, as well. we closed on the ten-year at

5.54, below that at 5.51%. italy closed at 2.256%. spain on the two-year closed at 3.09%. talks on the cliff seem to be advancing as the top republicans say the gop is ready to negotiate. berlusconi steps up the rhetoric against monte, accusing him of adopting german-centric policies. and hsbc agrees to pay a $1.9 billion fine. thank you for joining us today. the u.s. treasury has decided to sell the rest of its stakes in aig ending the government's ownership of the cup four years after the bailout. 16% of aig is being offered to raise $7.6 billion. at one point, treasury

determined it would never generate today profit to u.s. taxpayers as it old out and returned to voice. >> i just feel all warm and cozy inside about it. texas instruments is narrowing its fourth quarter sales outlook and nudging up earnings forecast after accounting for its exit for most of the mobile chip market. t.i. now expects to own shares. last month, the company announced it would cut nearly 5% of its workforce. shares, though, we can check on frankfurt trade shedding .8%. and as many as 10,000 union workers for michigan and the u.s. are expected to protest at the state's capital building today over a proposed right to work bill.

this would prohibit consumers to pay more. governor rick snyder says he'll sign it. michigan will become the 24th u.s. right to work staid state. and cnbc is taking to washington today as we send becky quick, larry kudlow and jim cramim cramer to the white . they'll be leading off with a special mission critical rise above d.c. report. it's part tax. read, becky? >> like you said, we are occupying washington. this is where we've camped out all night. there's been all this talk about the fiscal cliff. we know it is fact approaching. we know it is something that would threaten not only the united states economy, but the

economies around the globe. if we go over that cliff, there will be steep cuts and spending and steep tax increases that would automatically kick in. what we're doing here today is talking to our elected officials, talking to people who are involved in these talks, trying to figure out what will happen, where we are and if there's any way to avoid that cliff, if there's a good way to come about with tax reform and a close look at what's been happening on the spending side, as well. we have a lineup of a lot of gets who are here. joining us this morning, early on we'll be joined by representative jeb henserling. he will give us on some of the insight on what is happening. we're talking to senators this morning. senator ron johnson will be joining us. and grove er nordquist. he is rite in the center of this base. a lot of people see him as a huge part of the problem. if you want to get something

solved ahead of time. but there are others that say this is the right thing to be doing at this point. this is a full day of coverage. senator mark warner will be joining us, as well. a lot of people think if there's a compromise, it would start in the senate. obviously, a lot of questions as to what's happening. ross and kelly, it seems like things have gone a lot quieter than they had been for this week. for those on the inside, for those in the know, for those who have been watching for a long time in washington, they say it's a good thing because it probably indicates that talks are make some progress. you don't want to be talking out in front of the cameras when you may be making progress behind the scenes. at this point, quiet is probably a good thing. that's how we'll be looking at it, at least starting off this morning. >> becky, are you going to have to stay there as long as it takes lawmakers to resolve this? >> that's right. i've brought my tent, i've brought my coats. no, the actually, we are here food today, but even when we're

not in washington, we will continue to hold their fooeld feet to the fire and try to get some serious answers. >> and that's a threat, right? if they don't resolve it, you'll come back. >> that's right. so they better watch it. >> exactly. don't want an angry becky. >> thank you so much for joining us. that coverage will continue as soon as we're up here. coming up, good or bad headlines out of washington, will or won't lawmakers reach a budget deal? can investors trade the fiscal cliff or are we going to ride it out for the rest of the year? we'll get one inside perspective, next. i always wait until the last minute.

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european markets are firmer right now after thin gains. yesterday, the ftse up near nearly .8el%.

and the ibex up nearly .8%. we're pretty much at the high for the year, 52-week high and up nearly 28% for the year. >> much better than you might think with the news flow. >> yeah. >> let's take a quick look at what's on the agenda in the u.s. gap is expected to widen to just over $42 billion. at 10:00, it's october wholesale trade with inventories expected to rise .4%. just one major name, dollar general is due before the opening bell. good read there on the u.s. consumer. here is a quick look at future. up about 48 points for the dow on the team being. so what is in store for the trading session? joining us now, david lutz. he's ahead of etf trading. good morning, mr. dave. and let's start with the fiscal cliff. we were just talking to becky about it. what's the best way for you to gauge where market is expecting

a compromise here? >> good morning, kelly and ross. thanks for having me. you know what? one of the main things that the trading community has been looking at is a defense contractor. these guys are ground zero for any fiscal cliff stress. yesterday when the president got on and the future started selling off, we were watching the defense contractors. they weren't sliding whatsoever. so we were telling our clients, this is a near term blip in the market. unfortunately we are surrounding by headline trading. but a lot of the underlying current right now seem to be saying that the deal is saturdaying to come together. and i think becky hit it right on the head in the prior segment saying we're not seeing these guys in front of the cameras. they're in the rooms talking, which is important. so we keep telling clients, watch these defense contractors. it has utx, it has boeing, it has lockheed martin. these guys will be the most impacted by sequestration if this hits. so we always watch this for stress if the market is selling off for cliff reasons or if it's just a near term emotional blip.

kelly, the other thing we're paying a lot of attention to is the gold market. we've been seeing investors buying a lot of protection against gold over the last month and gold has been having some big swings that have been well publicized because of the fiscal cliff action. now, why? everybody is like, all of a sudden, if we go over the cliff, gold should jump because it's a safe haven trade. not whatsoever. if we go over the cliff, that's tighter monetary reaction. that's a big cold headwind as far as the buzz is concerned out there. that's why we've been seeing a lot of people buying december and january put peps. >> david, normally this time of year, we get window dressing. i just wonder whether the opposite is happening. >> you're hitting it right on the head, ross. it's not just the change in taxation rates. we've had the bunsen burner coming off in europe. we have a lot of signs that china is not having a hard

landing. this market should be significantly higher than it is. but a lot of cliff stress is built in. what we're seeing as far as the taxation rates is exactly right. this time of year, normally we have fund managers buying all the winners. we want to have these things on our reports. we have apple saying we are long to home builders, it was one of the best performers. but with the risk of cap gains jumping from 15% possibly up to 39%, we have the opposite effect. we have a lot of people dumping these stocks for taxation reasons. they could be setting up synthetic longs so they can get long these stocks again in january. but we've got a lot of winners like apple computer that's under a tremendous amount of pressure because of possible changes in taxation rates. >> david, with are people then going to look at names abroad? so, you know, ross is just listing how will european markets, for example, have been doing just recently. is this the time when traders rotate out of the u.s.? >> well, you know, i think

traders are rotating out of equities in the u.s. to a degree, we've watched eu financials jumping significantly. i've always got the euf and etn on my screen. that thing has been making some nice moves. we've got the dax leading if s&p of late and we've been paying attention to the dax intraday to see what's going pop we've got a lot of emerging markets starting to act well and a lot of people starting to get bullish on china. they're not necessarily getting long, but we have to watch some of our proxies for short telling in china, indicateding a a lot of the hedge funds are covering. we've seen some noted technicians that al of funds are taking attention to. he's saying now that we have some of the congress coming off. thank you for joining us today on the program. >> yeah. coming next, "squawk box." becky there in washington, d.c.

all day coverage today on cnbc. you don't want to miss that. and coming up on european "squawk box," this man could be the next prime minister of italy. try and catch that if you can. see you back here tomorrow.